SIP Calculator
Calculate returns on your monthly mutual fund investments.
Summary
The Systematic Investment Plan (SIP) has fundamentally democratized wealth creation in India. Unlike the volatile world of stock trading or the low-yield safety of savings accounts, SIPs offer a balanced path to compounding wealth. By investing a fixed sum regularly (as little as ₹500/month), you navigate market volatility without the stress of "timing the market."
Whether you are planning for a dream home, your child's education, or a comfortable retirement, our SIP Calculator eliminates the guesswork. It projects your potential wealth based on historical market performance and the mathematical certainty of compounding.
🚀 Why Smart Investors Choose SIP in 2025
- Rupee Cost Averaging: This is the secret weapon of SIPs. When the market crashes, your fixed installment buys more units. When the market peaks, you buy fewer units. Over time, your average cost of acquisition drops significantly below the market average.
- Financial Discipline: Automated deductions (NACH mandates) ensure you save before you spend. This removes the emotional bias of holding back cash when markets are scary.
- The Eighth Wonder (Compounding): In a SIP, your returns are reinvested to generate their own returns. Over a 15-20 year horizon, the interest component of your portfolio often exceeds the principal investment by 2x or 3x.
- Flexibility: Unlike an Insurance policy or PPF, you can pause, stop, or increase (Step-Up) your SIP amount at any time with a click.
The Math Behind the Magic: How SIP Works
While our calculator does the heavy lifting instantly, understanding the formula helps you trust the numbers. SIP returns are calculated using the Future Value of Annuity method.
Where:
• FV: Future Value (Maturity Amount)
• P: Monthly Investment Amount
• i: Monthly Interest Rate (Expected Annual Rate ÷ 12 ÷ 100)
• n: Total Number of Installments (Years × 12)
SIP vs Lumpsum: The Ultimate Showdown
Investors often ask: "I have ₹1 Lakh bonus. Should I invest it all at once or start a SIP?" Here is the definitive comparison:
| Parameter | SIP (Systematic) | Lumpsum (One-Time) |
|---|---|---|
| Market Timing | Irrelevant (Best for beginners) | Crucial (Must buy low) |
| Volatility Risk | Low (Averaged out over time) | High (Immediate exposure) |
| Ideal For | Salaried / Regular Income earners | Windfall gains / Business profits |
| Psychology | Easy to sustain | High anxiety during crashes |
Taxation on Mutual Fund SIPs (Updated FY 2025-26)
Your SIP returns are not entirely tax-free. The tax liability depends on the type of fund (Equity vs Debt) and your holding period. Here is the latest tax structure:
Equity Mutual Funds
(Funds with >65% exposure to stocks)
- STCG (< 1 Year): Flat 20% tax on gains.
- LTCG (> 1 Year): Gains up to ₹1.25 Lakh/year are Exempt. Gains above this are taxed at 12.5%.
Debt Mutual Funds
(Funds investing in Bonds, G-Secs)
- Taxation Rule: Gains are added to your annual income and taxed as per your Income Tax Slab rates.
- No indexation benefits are available anymore (post-April 2023).
Advanced SIP Strategies: Maximizing Alpha
Don't just start a SIP and forget it. Use these pro strategies to supercharge your corpus:
- Step-Up SIP: Increase your SIP amount by 10% every year as your salary grows. A ₹10k SIP increased by 10% annually yields nearly double the corpus of a flat SIP over 20 years.
- Top-Up SIP: Whenever the market corrects by >10%, inject a small lumpsum into your existing SIP folio to lower your average cost further.
- Goal-Based Mapping: Maintain separate SIPs for separate goals (e.g., one for Retirement, one for Child's Education) rather than one giant pool. This prevents premature withdrawals.
Frequently Asked Questions
Can I stop my SIP anytime?
Yes, SIP is completely voluntary. You can cancel the mandate via your net banking or AMC portal instantly. Note that stopping a SIP does not mean withdrawing the money; your existing units continue to grow.
What happens if I miss a SIP installment?
Generally, the AMC will re-attempt the transaction. If it fails 3 consecutive times, the SIP may be cancelled. Banks may also charge a 'bounce charge' for insufficient funds.
Does SIP guarantee returns?
No. SIPs invest in market-linked instruments. While they historically beat inflation and FDs, they carry market risk. Past performance (12-15%) is not a guarantee of future returns.
Is SIP covered under Section 80C?
Only SIPs in specific <strong>ELSS (Equity Linked Savings Scheme)</strong> funds qualify for tax deduction up to ₹1.5 Lakh under Section 80C. Normal equity or debt funds do not provide tax benefits.